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The Fatal Flaws for Process Manufacturers

Written By: Olin Thompson
Published On: January 11 2003

Introduction

In the TEC article "Find the Software's Fatal Flaws To Avoid Failure", we explored the concept that software can have fatal flaws that can result in anything from discomfort to disaster. Fatal flaws are defined as the gap between what a software product offers and the critical functions that a company needs. Many fatal flaws are the result of a company's industry. The process manufacturing industries, including food, CPG, chemical, pharmaceuticals and others have some potential fatal flaws that are common among this group and some that are unique to the actual industry (not the broad category of process or food but diary, meat, vegetable process, etc.) See "What Makes Process Process".

How many Fatal Flaws should you expect?

Within the process industries, the potential for fatal flaws is related to two elements:

  • The business function

  • The company's position in the Supply Chain.

The business function impacts your potential fatal flaws. In general, the closer you are to the CFO's office (general ledger for example), the more uniform the functions become across all industries and therefore, most vendors can handle most of your issues. The closer you are to the plant floor, the greater the variation and therefore the greater the potential for fatal flaws.

Your company's position in the Supply Chain also impacts your potential fatal flaws. The closer you are to the natural resource (the farm, the mine, the oil field, etc.) the greater the variability of your incoming material. Greater variability requires functions to track, plan and execute in a way that accounts for the variability. This variability results in potential fatal flaws. As your position in the supply chain approaches the consumer, the variation in materials becomes minimized and product becomes standardized, reducing the potential for fatal flaws.

The sources and examples of Fatal Flaws

The characteristics of material yield some potential for fatal flaws. Bulk materials are more difficult to manage with software than packaged materials (a rail car of chemicals versus a case of paint). The predictability of both the materials and the process yields some potential for fatal flaws. If material is inconsistent (quality specifications) or the process is not predictable (quality, yield) then it is more difficult to manage with software.

Production processes also give rise to the potential for fatal flaws. If you change the formula or recipe when you move from line to line, this may be a fatal flaw. If you vary the types of raw ingredient you use due to price or quality variations on a daily or even run-by-run basis, this may be a fatal flaw. In both these cases, will the product you select handle multiple formulas for the same end-item in planning, in costing, in execution?

Your relationship with your customers shows some potential for fatal flaws. If you have complex pricing (deals and promotions in CPG) or must provide customers with extensive documentation (certificate of analysis, Material Data Safety Sheets) fewer software products will have the features you need.

The vendors and process Fatal Flaws

Today, most vendors claim to "focus on process". Many of these vendors are generalists who focus on many different markets. (Question - How many markets can one vendor focus on and still be allowed to use the word "focus"?) When looking at vendors, a good rule of thumb is, the broader the market aims of the vendor, the greater the potential for fatal flaws. A vendor with broad market ambitions must spread their R&D dollars around to cover multiple markets. They also design products that work in many markets; that often forces compromises in some of those markets. Both of these lead to a lack of the detailed features required satisfying many process company's needs and therefore the software product's fatal flaws.

At the other end of the spectrum are vendors who specialize in a smaller market. These can be vendors who focus exclusively on process or are even more focused on a specific process (vendors exist that do only fish processing for example). These boutique vendors must satisfy the needs of specific markets because that is their only business. (see "Boutique Vendors Can Bring Big Value").

The "process fatal flaws" stated above should be easy to find with a process only vendor. Some generalist vendors will have these features, but you must proceed with caution to insure that the generalist vendor you select has what you need and that it works in a way that satisfies your specific needs — remember the devil is in the detail. At a lower level of detail (not process, not food but meat, dairy, etc.) exist more potential fatal flaws that also must be considered.

Looking for the Fatal Flaws

To determine where your potential fatal flaws are, look at the details of your industry. Variations in business that may create fatal flaws may include items like:

  • Specialty vs. commodity products

  • Batch vs. continuous operations

  • Industrial vs consumer market

  • Natural resources as raw material vs. preprocessed materials

  • Assembly vs. disassembly of raw materials into end products

For each of these trade-offs, different potential fatal flaws exist. You need to seek out the fatal flaws that may lurk due to your business's specific needs. Ask others in the industry. Seek out consultants with hands on experience in your industry. Ask the vendors to tell you what they consider your fatal flaws. A truly focused vendor will know the issues.

Summary

Every piece of software you consider holds the potential for fatal flaws. Miss the fatal flaws and it is difficult to project what the future holds for you. As a process company, you have greater odds of running into Fatal Flaws than other companies. Look at the details; ask yourself the hard questions, more importantly, ask the vendors the hard questions. Get the proof that the vendor you select has the details you need and not fatal flaws.

About the Author

Olin Thompson, a principal of Process ERP Partners, has over 25 years experience as an executive in the software industry with the last 17 in process industry related ERP, SCP, and e-business related segments. Olin has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce and the impact of technology on industry.

He can be reached at Olin@ProcessERP.com.

 
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